GROUP 2 (QUIZ)

CHAPTER 2:
CORPORATE GOVERNANCE: WHAT IS A WELL GOVERNED ORGANIZATION?

1. Statement 1: A well-governed organization is one which implements effective risk management and external
control systems.
Statement 2: External control addresses internal events that affect the company's operations, reporting, and
compliance.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER D
2. It is a process effected by entity's Board of Directors, management, and other personnel, designed to provide
reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.
A. External Control
B. Enterprise management
C. Internal Control
D. Risk management process
ANSWER: LETTER C
3. It is a process, effected by entity's Board of Directors, management, and other personnel, applied in strategy
setting and across the enterprise, that is designed to identify potential events that may affect the entity, manage
risks to be within its risk’s appetite, and provide reasonable assurance regarding the achievement of entity
objectives.
A. Enterprise risk process
B. Enterprise risk management
C. Risk management process
D. External Control
ANSWER: LETTER B
4. Statement 1: The Sarbanes-Oxley Act is a United States federal law that aims to protect investors by requiring
more reliable and more accurate corporate disclosures.
Statement 2: Spearheaded by Senator Paul Sarbanes and Representative Michael Oxley, the Act was signed into
law by the president George W. Oxley on July 30, 2002.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER A
5. Statement 1: Corporate laws, alongside the Philippines SEC Code of Corporate Governance, come into play and
require various regulations for Philippine companies.
Statement 2: Adherence to these laws, the regulations, principles, and codes of corporate governance are the gauge
by which we can conclude whether a company is well-governed.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER C
6. Statement 1: Corporate regulations such as the Sarbanes-Oxley Act (SOX) require strict rules when it comes to
the governance of covered entities.
Statement 2: The OECD Principles of Corporate Governance, on the other hand, provide guidance in defining
what a well-governed organization is.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER C
7. Statement 1: External events would include economic recessions, natural calamities, pandemics, and negative
impact of stiff competition among others.
Statement 2: To address these negative external events the company needs to implement laws and regulations
regarding this matter.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER A
8. Statement 1: SOX act benefits both small and big businesses and the investors.
Statement 2: SOX formulated the principles of corporate governance.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER D
9. Statement 1: SOX considers rules-base kinds of corporate governance mechanisms.
Statement 2: Repercussions leads to rise in debt financing and venture capital.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER C
10. The main areas of the OECD principles are the followings, except:
A. The equitable rights of shareholders
B. The responsibilities of the board
C. Disclosure and transparency
D. The role of the stakeholders in corporate governance
ANSWER: LETTER A
11. They formulate the principles of corporate governance.
A. Executive
B. SOX
C. OECD
D. World com
ANSWER: LATTER C
12. Statement 1: Internal control is the innermost circle
Statement 2: It addresses internal events like recession, calamities, pandemic, etc.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER A
13. The following are the highest in any company, except:
A. Salaries
B. Bonuses
C. Both a and b
D. None of these
ANSWER: LETTER D
14. Statement 1: Bonuses and incentives is the basis of a company in determining profit or sales.
Statement 2: Sales or Profit reported in financial statements can be neither manipulated nor inflated.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER D
15. The following are measures to govern RPTs include ensuring, except:
A. ensuring that transactions between separated parties are at arm’s length basis, market, or reasonable price.
B. Internal limits for individual and aggregate exposures
C. Full reporting and complete financial statements on RPTs
D. Determination of the purpose of the RPTs
ANSWER: LETTER A
16. Subsidiary Company is a company that is being controlled by its
A. Controller
B. Corporation
C. Parent Company
D. Related Party
ANSWER: LETTER C
17. They are the events that are beyond the scope of internal control.
A. Internal events
B. Transaction events
C. External events
D. None of these
ANSWER: LETTER C
18. Statement 1: There should be an informal policy within the company that governs executive compensation.
Statement 2: Many businesses use sales or profit achieved by the company as a basis in determining management
incentives and bonuses.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
ANSWER: LETTER B
19. Organizations were discouraged from attempting to inflate figure such as revenues and _______?
A. Net Income
B. Expenses
C. Capital
D. Gross Profit
ANSWER: LETTER A
20. The ______ significantly uncreased the fines for public companies committing the offenses.
A. Executive
B. SOX
C. OECD
D. World com
ANSWER: LETTER B